Dismissing criticisms on a clampdown of Islamic financial services in Morocco, the Moroccan financial authorities have now upped the ante on developing a more conducive platform for Islamic finance in the country.
Currently, Morocco does not allow full fledged Islamic institutions and only conventional banks are permitted to offer Islamic financial services products, albeit, with a higher tax than conventional banking products. This will change soon.
Morocco financial authorities, criticised by powerful Islamist opposition for the slow start of Islamic banking, are determined to develop Islamic financial services, Morocco’s central bank chief on Thursday.
“We have begun the experience of Islamic finance. We are assessing the result and will build on that to expand further Islamic banking services,” Abdellatif Jouahri told a news conference. Last year, Morocco authorised segments of Islamic finance partly to lure investment inflows from Gulf Arab states on which on their fast-growing tourism and real estate sectors depend.
The North African kingdom has yet to allow fully-fledged Islamic banks to operate, with analysts arguing that Rabat government could be fearing that such banks might lend some backing to strong Islamist opposition. Morocco now allows only conventional banks to offer Ijara leasing products, Murabaha contracts to buy and re-sell an underlying goods and Musharaka – co-ownership financing structures.
The government also imposes higher tax on Islamic financial products than conventional banking products. “There is a problem with the tax and we are about to completely resolve it,” Jouahri said. He dismissed Islamist critics that he and other financial officials were deliberately hindering the development of Islamic banking out of bias against Islamist groups.
“Banks had set up logistics structures to sell these financial services. They trained staff. All this was done because we want to develop Islamic banking,” he added.
Jouahri said Morocco has yet to authorise foreign Islamic banks because the authorities were put in awkward position by the high number of foreign investors willing to open Islamic banks there. He said up to 10 investors from many Arab and Islamic states had expressed interests to open Islamic banks in Morocco.
Islamist-leaning Justice and Development Party (PJD), the main opposition group in the parliament, has said its members in the legislative body would press the government to ease tax on Islamic banking and authorise Islamic banks to open.
PJD experts argue that developing Islamic banks and other related financial services would help Morocco adding up to 2.0 per cent growth on the top of average 4.0 per cent growth rate in the past decade.
Source: Islamic Finance News Portal